The UK’s largest roofing contractor Avonside, who are based in Manchester is set to go into administration. Restructuring firm, Begbies Traynor, are working on the case. It is rumoured that parts of the group may be able to be sold, saving an unknown amount of jobs.
Once the administrator has been formally appointed for the main part of the company and some parts are being bought out. The founder, Anthony Burke, has now resigned as director from the 23 August and it is not known whether the rest of the board of directors have yet resigned.
It is thought that the company will enter the insolvency process with debts totalling nearly £7 million to specialist roofing distributors and several roofing merchants.
NatWest rejected a proposal from Core Capital
Avonside, which employs 1,600 contractors and other staff, is on the brink of collapse after its taxpayer-backed lender rejected a rescue deal from Core Capital. Natwest believe recovery of its loan is more likely through insolvency proceedings, though a person close to the bank urged it was a ‘’director-led process’’.
Insiders share that the bank had rejected a proposal from Core Capital who have held a stake in the company since 2017, its private equity shareholder, to inject funding into the firm, leaving no other option than to enter company administration.
According to Sky News who reported on this matter, Avonside’s demise is understood to be linked to a mix of inadequate financial controls and underperforming parts of the business – triggering breaches to its banking covenants.
As well as roofing, Avonside installs plumbing, heating and solar power on behalf of leading housebuilders such as Taylor Wimpey.
Its biggest shareholder is Tony Burke, its executive chairman, although he is said to have fallen out with other investors in recent months.
It was understood that NatWest reckons it is likely to recover more of its loan through an insolvency process, although a person close to the bank insisted it was a “director-led process”.
Fragile state of the UK construction market
The company’s collapse underlines mounting concerns about the wider UK economy, with data published on Tuesday showing that construction activity contracted in August for the second consecutive month.
“Not only did construction activity fall for the second month running, but a range of indicators from the survey pointed to further weakness ahead,” Andrew Harker, economics director at S&P Global Market Intelligence, said.
New orders showed the weakest growth since June 2020 and concerns about the sector and the wider economy hit confidence, he said.
Job creation slowed but price pressures were their weakest since February 2021, a potential silver lining for the Bank of England as it monitors the impact of inflation in the labour market and the broader economy.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.